Ever since the Modi government rode to power with the promise of bringing back the billions stashed away by Indians in tax havens abroad, they have been constantly reminded of this promise. The National Democratic Alliance (NDA) drafted a new Black Money Act on May 11, 2015 and also announced a voluntary disclosure scheme till 30 September for declaring assets and until 31 December 2015 to pay tax at 30% and penalty at 30%. In October, the government announced that it had collected Rs. 4147 crores ($623 million) as part of this scheme. Various estimates put the amount of Black Money from India at anywhere between $181 billion to $1.8 trillion dollars. Regardless of which estimate one takes, the fact remains that even a fraction of the amount abroad has not been recovered. Within India, Black Money constitutes about 40% of the Gross Domestic Product (India’s GDP is expected to be $2.4 trillion in 2016). There are 70 countries that maintain secret banking and are also referred to as Tax Havens.
In the video above, Dr. Subramanian Swamy describes four ways in which the Black Money can be brought back to India:
- Do as the Americans did – jail the highest ranking official of an International Bank in India and ask them for the details of the Bank accounts of all Indians. If they refuse, put them in jail. This was done to the Swiss and they complied within 2 days.
- Like Germany, India can bribe a high-ranking official of an international bank and get the information from a tax haven such as Lichtenstein Bank. The French did the same thing to Hongkong Shanghai Bank (HSBC).
- Using DTAA Double Taxation Avoidance Act, a small part of Black Money can be recovered by exchanging information between sovereign tax authorities. Only future violations will be attracted by this way.
- According to a United Nations (UN) resolution, if any country wants the details of all the holdings of its citizens in the tax havens, then the country has to pass a law nationalizing their assets abroad. Once this law is passed, the UN resolution can be used to get the details of the accounts from any tax haven. Philippines, Egypt, and Libya have already taken this approach.
In a recent speech at the Indian Merchants’ Chamber Mumbai, Dr. Swamy said that the Prime Minister favored using the fourth approach listed above to recover Black Money from abroad.
In this series, we will describe the results of three nations, Philippines, Egypt and Libya in their efforts to bring back the ill-gotten wealth of their dictators from tax havens. Philippines presents an interesting scenario as Marcos was deposed almost thirty years ago!
- The conversion rate used in this article is 1 USD = 66.53 Rupees.
- Text in Blue points to additional data on the topic.
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